China’s Strategic Energy Pivot: Iranian Oil Gains Prominence Amidst Venezuelan Supply Shifts
In a significant realignment of global energy flows, Chinese independent refineries are increasingly turning to discounted Iranian heavy crude, replacing supply from Venezuela that has been disrupted following intensified U.S. measures against the South American OPEC producer. This strategic shift underscores the complex interplay of international politics and energy security, as China, the world’s largest crude importer, navigates evolving geopolitical landscapes to secure its energy needs.
The Venezuelan Shift: U.S. Pressure Reshapes Supply
The impetus for this energy pivot stems from a sharp decline in Venezuelan oil exports to China since mid-December. This reduction follows a campaign by the U.S. administration, which included blockading sanctioned vessels and intensified efforts to assert control over Venezuela’s oil sales and revenues. U.S. President Donald Trump had stated Washington’s intent to control Venezuela’s oil industry indefinitely, aiming to pressure the government of President Nicolás Maduro.
As part of these efforts, global trading firms Vitol and Trafigura were reportedly tasked by Washington to sell up to 50 million barrels of Venezuelan crude. However, state-owned PetroChina reportedly opted against purchasing these U.S.-controlled cargoes, creating a supply vacuum in the Chinese market.
Iran Steps Up: A Pragmatic Solution for Chinese Refineries
To bridge this critical supply gap, China’s independent refineries, often referred to as “teapots” and primarily located in the eastern Shandong province, have found a compelling alternative in Iranian heavy crude. Sources indicate that these refineries, previously major buyers of Venezuelan oil, are now acquiring Iranian crude from existing storage tanks in China and from vessels at sea.
The primary driver behind this preference is the significant discount offered on Iranian oil, making it an economically attractive option. Traders noted that Iranian heavy crude was available at approximately $12 per barrel below Brent crude, positioning it as the most cost-effective alternative compared to Venezuelan shipments marketed by Vitol or Trafigura, or even Canadian heavy grades. Russian Urals crude, another alternative, also traded at discounts but was slightly less competitive for March deliveries to China.
Market Dynamics and Broader Implications
The data reflects a clear shift in energy sourcing. Kpler analytics showed that China’s Venezuelan crude imports averaged 394,000 barrels per day in 2025 (likely referring to the recent past), accounting for about 4% of China’s total seaborne crude imports. Following the U.S. actions, floating stocks of Venezuelan crude in Asia halved to 8.26 million barrels by late January from 16 million barrels at the start of 2026 (likely 2024), indicating a sharp drop in new arrivals.
Conversely, Iranian oil stored on tankers in Asia has seen a reduction, decreasing from 46.25 million barrels to 41.72 million barrels over the same period, suggesting increased uptake by buyers. This illustrates a pragmatic response by Chinese refineries to secure necessary feedstock amidst a disrupted global market.
This strategic energy recalibration by China highlights its commitment to maintaining stable crude supplies through diversified sourcing, adapting swiftly to geopolitical shifts that impact traditional trade routes and supplier reliability. The dynamic interplay between global sanctions, market pricing, and national energy security continues to reshape international oil trade patterns.
